you know, if one of the presidential candidates would refute this plan, they would have my vote. And the vote of the "silent majority"
badger boy | 09.19.08 - 10:22 am | #
the candidate who refutes this plan loses the election. such is the dismal state of our country.
JD: $1T+ would not surprise me either. One's Wall Street turns in their toxic assets abd it will be published our eyes will be the size of saucer plates...
From CNBC: The cost so far (does not include swap agreements by the Fed with foreign central banks)
$200 billion for Fannie Mae [FNM 0.42 -0.061 (-12.68%) ] and Freddie Mac [FRE 0.26 --- UNCH ( ]. The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed. The deal puts the two housing finance firms under government control.
$300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.
$4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.
$85 billion loan for AIG [AIG 2.06 -1.69 (-45.07%) ], which would give the Federal government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer. AIG management will be dismissed.
At least $87 billion in repayments to JPMorgan Chase [JPM 38.12 -2.62 (-6.43%) ] for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers [LEH 0.11 -0.19 (-62.37%) ]. U.S. Treasury Secretary Henry Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.
$29 billion in financing for JPMorgan Chase's government-brokered buyout of Bear Stearns in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.
At least $200 billion of currently outstanding loans to banks issued through the Fed's Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.
What are all the Chicago School folks saying about this? Or was it ok to trash somebody else's economy during the experimentation phase, but now that they got the chance to try it here - all bets are off?
(Bloomberg) -- The market storm that brought down Lehman Brothers Holdings Inc., American International Group Inc. and other pillars of U.S. finance may have also blown holes in the portfolios of House Speaker Nancy Pelosi, Senator John Kerry and more than 50 other members of Congress.
Pelosi, in her most recent financial disclosure form, reported that her husband owned between $250,000 and $500,000 of stock in AIG, which ceded majority control to the U.S. government this week in exchange for $85 billion of loans.
Kerry, the 2004 Democratic presidential nominee, disclosed that his wife, Teresa Heinz Kerry, had more than $2 million of AIG stock at the end of 2007, when shares were worth $58.30. AIG has fallen 85 percent this week to close yesterday at $2.69. The lawmakers' aides didn't respond to calls seeking comment.
Altogether, 56 senators and representatives had stakes in AIG, Lehman, Fannie Mae, Freddie Mac, Bear Stearns Cos. or IndyMac Bancorp Inc. -- some of the biggest casualties of the market bloodbath, according to the Center for Responsive Politics. The most recent annual disclosure filings list investments as of Dec. 31, 2007, and reveal the size of holdings only within a range of values. Lawmakers may have sold shares since then.
Lawmakers, like everyone else in America who has any kind of retirement portfolio or stock holdings, are going to be suffering,'' said Gary Kalman, a lobbyist for the Boston-based U.S. Public Interest Research Group, a consumer-advocacy organization.This is a serious issue. We need to have a serious response.''
After quite a bit more reaming of JoeSixPack has occurred we can look forward to a surge in populism followed by the anointment of a benevolent dictator.
Rome as you have known it all of your life is soon to be gone like a fart in the wind.
Ya know, I realize we're all getting numb to the numbers. But doesn't hundreds of billions of dollars mean a lot of money for a country of 300 million? Maybe 150 millions working age people?
Sounds the the government is moving debt around, that could be $50,000 or more for every worker. It is truly massive scale manipulation.
In case anyone is interested, one trillion dollars ( what Comrade Paulson is going to spend) looks like this:
$1,000,000,000,000
To try and understand how FUKED we are:
If you stack up $ 1,000 bills, $ 1 trillion would need a pile that is 80 miles high.
The entire expenditure of NASA over the last 40 years has been approx. $ 600 billion
$ 1 trillion exceeds the worlds total military expenditures for 2004
$ 1 trillion is more than the combined gross revenues (not profits but sales) of Wal Mart plus Exxon plus General Motors plus Ford Motors.
Assuming the United States consumes about 17 billion barrels of oil a year and assuming the cost of a barrel of oil is about $ 65, a trillion dollars will buy an entire years worth of oil for the USA.
6 months ago
Want to own a cruise ship? Using your $ 1 trillion, buy yourself that little boat to sail the seas the Queen Mary 2 with accommodations for 2,620 passengers (enough room for the whole family!) In fact, you could buy a thousand QM2s (share them with your friends!) and there would even be a little left over to pay the wages of the 1,250 crew members for each ship.
Feel like sharing the wealth? With a population of approximately 300 million people, you could give away your $ 1 trillion by giving every man, woman and child in the U.S. $ 3,400 each. Alternatively, you could give $ 38,500 to every Iraqi living in Iraq.
Lets say your working life is 40 years (from age 25 to age 65) and you work 40 hours a day, 52 weeks a year (youre a workaholic and dont take any vacations). If you earned $ 1 trillion during your working life, then you got paid $ 200,000 per minute
I guess that people here don't have jobs they would like to keep? If nothing is done, and no business can borrow (as is the case today), lots of those jobs are disappearing, and lots of other companies are likely to go bankrupt. What is the wonderful plan to avoid this outcome that the naysayers have? And what do they know that Bernanke and Paulson don't?
Hail Caesar.
So Paulson's now running the country for the greater good of Goldman Sacks? And the prez and the congress have decided to just go hide.
And it all happened without anybody firing a shot.
I guess that people here don't have jobs they would like to keep? If nothing is done, and no business can borrow (as is the case today), lots of those jobs are disappearing, and lots of other companies are likely to go bankrupt. What is the wonderful plan to avoid this outcome that the naysayers have? And what do they know that Bernanke and Paulson don't?
David in NY | 09.19.08 - 10:31 am | #
Markets should be free. People who are free to make money, should also br free to lose it.
I can't wait for j6pack to wake up with that thudding headache, tied up, unable to speak with that Mongolian ball gag, and wondering where the hell he is and what is about to happen...
Here's a chart of <a href="http://img49.imageshack.us/my.php?image=iwmvalidtradelmaokk6.png>IWM showing its allegedly valid pre-market trade up $160 - may they rest in peace.
If the Treasury can accurately value the assets in question, and purchase them at a discount to that value, and later sell at above that discount, this could be good both for the Treasury and for the financial system and the wider economy that depends on credit for working capital. The banks still get spanked by selling assets at well below what they paid for them, and will be more prudent for some time into the future. Perhaps by then intelligent regulations (such as regulating CDS as "insurance") may be in effect.
And the process of determining the value of the illiquid assets may help them to become more liquid, so that the Treasury may not have to purchase all that much.
It's a disagreeable solution, but not as disagreeable as the alternative. The real economy requires working capital, and most companies today rely on borrowings for that.
I've got SKF at $93 as well on Yahoo (down 22%), but the real time quotes that Yahoo usually gives are stuck at $92.98 from 9:33 EST. It's freakin' one hour past that. I tried to buy some on Fidelity, but when I hit the submit order button it dies on me.
(CNN) -- Republican presidential candidate Sen. John McCain said Friday morning he would establish a new agency to deal with the U.S. financial crisis that many experts say is the worst since the Great Depression....
That agency, a mortgage and financial institutions trust, would work with the private sector and regulators to identify institutions that are weak and fix them before they go broke.
I've got SKF at $93 as well on Yahoo (down 22%), but the real time quotes that Yahoo usually gives are stuck at $92.98 from 9:33 EST. It's freakin' one hour past that. I tried to buy some on Fidelity, but when I hit the submit order button it dies on me.
it's halted. i'm trying to find out if its by SEC order or if the market maker simply cannot balance order flow.
In hard times, tent cities rise across the country:
Within weeks, more than 150 people were living in tents big and small, barely a foot apart in a patch of dirt slated to be a parking lot for a campus of shelters Reno is building for its homeless population. Like many other cities, Reno has found itself with a "tent city" an encampment of people who had nowhere else to go.
From Seattle to Athens, Ga., homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.
Nearly 61 percent of local and state homeless coalitions say they've experienced a rise in homelessness since the foreclosure crisis began in 2007, according to a report by the National Coalition for the Homeless. The article requested is no longer available.
So through a variety of positive feedback loops created from the sale of loans and the use of securitised loans as collateral , trillions of virtual money was inadvertently created by the financial system.
& now the US government just went and monetised it.
So if Joe Sixpack makes bad investments and can't pay his bills, The Powers That Be basically tell him to go starve in a ditch. If Malfeasance Megabucks III makes bad investments and can't pay his bills, The Powers That Be give him money, pat him on the bottom and tell him to be a good boy in future.
Why does it FEEL so much like the money supply is shrinking? This is crazy what's going on. They are pumping money in and... there is no money so anyone can do anything. That's deflation. I really want to know. If for sure inflation, I'll take out a fixed rate mortgage tomorrow and throw the cash into oil and silver.
I hate the word Stagflation. That's what happens when the nasty mother-in-law to be accidentally stumbles into the bachelor party. We need another word.
"If the Treasury can accurately value the assets in question, and purchase them at a discount to that value, and later sell at above that discount, this could be good both for the Treasury and for the financial system and the wider economy that depends on credit for working capital. The banks still get spanked by selling assets at well below what they paid for them, and will be more prudent for some time into the future. Perhaps by then intelligent regulations (such as regulating CDS as "insurance") may be in effect."
So, you are saying that the GOVERNMENT can value assets better than the MARKET?
It's a disagreeable solution, but not as disagreeable as the alternative. The real economy requires working capital, and most companies today rely on borrowings for that.
SRC | 09.19.08 - 10:39 am |
Many also rely on consumer and public sector spending on their products. Now that trillions (and, it will be trillions) are being diverted away from middle-class taxpayers, those same companies probably won't be borrowing. They won't be borrowing to finance growth anyway.
Your intelligence regarding my provenance is inaccurate. I'm simply noting similarities to the original RTC concept, which I believe did yield a paper profit to the government. I don't like the socialist bent of the actions of the last two weeks, but if banks don't lend to companies, there will be a radical contraction in economic activity. It is not only financial institions that use credit to leverage. "Normal" real economy companies do that too, and if they are obliged to deleverage, many may be obliged to contract their operations.
It appears to me that the problem is not bank failure, but bank reluctance to lend -- the seizure in the credit markets. If banks stop supplying working capital to corporations, where will they get it? Will the general public purchase commericial paper? I doubt it. So it appears to me that Paulson & Co are tying to avert a calamity in the real economy.
Paulson:
"We must now - because the Republicans chances of staying in the White House are being flushed down the drain - take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses."
Arrrr!
Anybody think all this maneuvering will actually stabilize the markets? I have this sinking feeling that there is no safe haven, the last harbor got caught in the pyroclastic flow from the eruption.
Funny, I've got a new house with a bad roof, it's getting fixed in a week but during hanna I had to put a tarp over a large section of it. The tarp cut down on the leaks but a decent amount still got through.
The RTC was one of the most draconian goverment solutions ever invented. The FDIC took over hundreds of banks/thrifts. It wiped out share holders, preferred holders and subordinated debt holders. The Justice Department often prosecuted the boards and management. Many served jail time. Bill Siedman, the head of the RTC, unceremoniously dumped collateral assets and tanked prices. The total cost to the taxpayer went exclusively to paying off INSURED depositors, not Wall Street.
Troubled Asset Relief Program (TARP). The tarp hides all sins.
Not only is it hiding sins, it is protecting assets that shouldn't exist anymore. Instead of propping up the stuff, it should be liquidated and gotten rid of. I'm worried that this new "RTC-like" entity is going to keep the shitburgers around forever.
SRC wrote: If the Treasury can accurately value the assets in question, and purchase them at a discount to that value, and later sell at above that discount, this could be good both for the Treasury and for the financial system and the wider economy that depends on credit for working capital.
SRC,
You have 3 ifs in front of one possible outcome.
I wouldn't go to Vegas on that.
There is good money out there, just none that want that want to help current banks. Raise interest rates, protect the dollar, protect savers, dump the consumption economy. IMO, it needs to be done.
large amounts of fictitious money - in the sense that if the system worked as textbook it shouldn't have been - was created.
Now that money (and some real money along with it), is being destroyed.
The government in the meantime, thinks it is pumping water onto the inferno, but since it doesn't understand the underlying systemic problem - is actually spraying on gasoline.
And just in case any of you were getting some crazy idea to go into PMs instead of the equity market where you are meant to be, you will now need to ante up a bit more margin:
Comex Raises Margin Rates on Gold Contracts by 47%, Silver 20% by Stuart Wallace Sept. 19 (Bloomberg) -- The Comex division of the New York Mercantile Exchange raised margin payments on gold and silver futures by as much as 47 percent after price swings accelerated.
The margin rate for Comex members advances to $5,500 a gold contract from today, from $3,750, the exchange said in an e- mailed statement late yesterday. The new rate for non-members is $7,425, from $5,063. One contract represents 100 ounces.
For silver futures, members will pay a margin rate of $6,000, compared with $5,000 previously. Non-members will pay $8,100, from $6,750. One silver contract represents 5,000 ounces.
The S&L Bailout: $32 billion every year for 30 years
"The $157-billion bailout was financed by floating 30-year bonds, the interest on which will make the ultimate cost much higher. The actual total will depend on what interest rates end up being between 1990 and 2020, but estimates range from $500 billion to $1.4 trillion (in other words, 1,400 billion dollars)."
The truth is that they had more than a year to try to unwind things in an orderly fashion, and failed miserably because they fail to understand that this is a symptom of our economic woes, not the problem.
Re: " the root cause of our financial system's stresses."
The root cause of this chaos is the direct corruption that links CEOs to accounting fraud, bad bets and shit regulations that distort accounting reality
All the other short ETFs (e.g. SDS, SRS, and TWM) gapped WAY down this morning at the opening (63, 66, 58 respectively). Hope everybody loaded up on some stellar deals.
Staying away from SKF anyway...but curious as to how they are going to handle it. Just a temporary halt??? Or are people locked in until Oct 2?
I think J6P might be getting it. This morning my BF who wakes up earlier than me came back in the bedroom at 6 AM yelling " They've stopped short selling !!!(he doesn't know what short seling is, but intuited that it wasn't good) They're buying back all of the bad loans and WE have to pay for it!!!!"
The true "Pony Story" of TARP:
In Texas a lot of Quarter Horse trainers "tarp" their young horses when they break them for riding. This involves pulling the horse down with ropes, tying it so it can't get up, then hitting it with one for those blue plastic roof tarps until it stops struggling and lays still. It's supposed to make the horse docile and subservient. I think all of us just got tarped.
P.S. Since I am a woman, I decided to be a Comradess instead of a Comrade, unless any of you guys object.
Did he just speak to the American people without smirking? Maybe I missed it? I also didn't see any swipes at Democrats for causing these problems. Am I wrong? I hope he's ok.
We need to cut taxes by 15% and increase the minimum wage by $5.00 and have a tax holiday as well, then cut mortgage rates to 1% and then make this Ownership Society work. What about privatizing Social Security before the market in Japan opens (tonight)???
"...A study by Valparaiso University law professor Alan M. White, a member of the Federal Reserve Board's consumer advisory council, found that banks working with distressed homeowners to modify their mortgages had failed to reduce the principal balance in 98% of the 4,300 cases studied. Nearly half the loan modifications did not even reduce the monthly payment amount.
The result was that thousands of the modifications made between July 2007 and June 2008 did not prevent foreclosures."
Any chance that part of the reason for the failure of modifications to actually MODIFY loans - and, in fact, the incredible lack speed with which the servicing industry acted - has anything to do with the fact that servicers are oftentimes given late fees and modification fees as part of their "additional servicing compensation" per the terms of the Pooling & Servicing Agreements between the servicers and the RMBS trusts that they service?
Try it yourself. The Merrill Lynch Mortgage Investors Trust Series 2002 AFC-1 prospectus supplement directly from the SEC. http://www.sec.gov/Archives/edgar/data/809940/000095013002000674/d424b5.txt
Perform a Ctrl-F search on "additional servicing compensation". Then go look at a dozen other prospectuses of your choice.
There is rightly tons of anger at the Repubs, but come on, the Dems are the ones who are all hog-wild for the bailout, not the Repubs. At least McCain called for the head of the SEC to be fired.
America keeps digging herself into a bigger and bigger hole ("digging her own grave?"). Ahmadinejad is laughing so hard this morning he can hardly contain himself. This is going to have a very bad ending. Does someone have a very clever and secret plan they're going to pull out at the last minute, so that we'll all be able to say, "Wow. Didn't see that coming. Boy oh boy, was that clever."?
Here's the deal ... if you're guilty of "lax lending practices" and/or "irresponsible lending", the taxpayers shouldn't be bailing you out by buying you're "illiquid assets". Besides, there's no such thing as an "illiquid asset"; only assets with no value or assets with a bid that the seller is unwilling to accept. There are $Bs reportedly on the sidelines ready to buy these assets, just not at prices these institutions are willing to accept. Bring back the RTC, albeit with stronger management; seize the institutions that fail to meet regulatory capital requirements; liquidate their bad assets; and place their good assets and businesses in the hands of capable owners!
Servicers/Lenders/Mortgage Market Participants
* Acqura Loan Services
* American Home Mortgage Servicing Inc. (formerly Option One)
* Assurant, Inc.
* Aurora Loan Service
* Bank of America
* Carrington Mortgage Services
* Chase
* Citigroup, Inc.
* Countrywide Financial Corporation
* EMC Mortgage Corporation
* Fannie Mae
* First Horizon Home Loans and First Tennessee Home Loans
* Freddie Mac
* GMAC ResCap
* Home Loan Services, Inc. (d/b/a First Franklin Loan Services & NationPoint Loan Services)
* HomEq Servicing
* HSBC Finance
o HSBC Consumer Lending
o HSBC Consumer Lending II
o HSBC Mortgage Services
o HSBC Mortgage Corporation
* IndyMac Federal Bank
* LandAmerica Financial Group, Inc./LoanCare Servicing Center
* Litton Loan Servicing
* MERS
* National City Mortgage Corporation
* Nationstar Mortgage, LLC.
* Ocwen Loan Servicing, LLC.
* PMI Mortgage Insurance Co.
* Radian Guaranty Inc.
* Saxon Mortgage Services
* Select Portfolio Servicing, Inc.
* State Farm Insurance Companies
* SunTrust Mortgage, Inc.
* Washington Mutual, Inc.
* Wells Fargo & Company
* Wilshire Credit Corporation
Trade Associations
* American Bankers Association
* American Financial Services Association
* American Securitization Forum
* Consumer Bankers Association
* Consumer Mortgage Coalition
* The Financial Services Roundtable
* The Housing Policy Council
* Mortgage Bankers Association
* Securities Industry and Financial Markets Associatio
WHat happens if all this money is 'created' but it never gets beyond the banks?
To solve liquidity trap, we will all get stimulus "checks" in the form of debit cards from the Fed. You can't get cash out of them, you can only use them for purchases.
Granted, not ALL of these entities are horrific - but enough of them are that I know not to be surprised by a study like Professor White's.
Oh, and all of those "bad loans" - such as my own - are NOW potentially being swept off of the lenders/note holders books if/when this new "TARP" is formed by the federal government. How many of the loans that make up CDOs/CDSs/ARSs would be performing loans were it not for bad modifications or efforts by the servicing entities to deliberately push performing loans into default?
"...Meanwhile, servicers, whom investors pay to collect mortgage payments from borrowers, often have no incentive to help borrowers find the ultimate holder of a loan, Mr. DelliBovi said. "Servicers make more money on a foreclosure than when the loan is worked out," he said."
- Alfred A. DelliBovi
Chief Executive Officer
Federal Home Loan Bank of New York
To summarize:
This is temporary BS by Paulson to stave off utter market collapse. He intends that it will get defined, modified and winnowed down as it moves through the process until not much real 'bailout' is ever really provided. He has bought a bit of stability today but sooner or later the punishment must be taken.
The instability, craziness and manic mood swings of this week bode absolutely nothing for the future except the certainty that things are out of control.
Anybody who does not get their assets out of harm's way at this point has no excuse. Just as deviation from long-term standards was the tell for problems to come in housing and mortgages and investment banking, so, too, do the sweeping 'new' rules tell that major discontinuity lies ahead for stocks, banks and the US economy.
JS: And, McCain did this because he cares not for political reasons. Why would he risk separating himself from Bush? Why would the deregulator do this?
Warlock, sayeth: The government in the meantime, thinks it is pumping water onto the inferno, but since it doesn't understand the underlying systemic problem - is actually spraying on gasoline.
Thanks for your reply. I'm on here to try to grasp the ungraspable, and every bit gets me closer.
I get what you're saying, but also this isn't the first application of gasoline. To carry your analogy further, it's like someone sprayed fire suppression foam over things before the Bradburian firemen arrived.
Churn fits into this somewhere, I just know it does. These people made their money moving money around. Speeding money up makes it look like more of itself, and slowing it down, like less. Is that part of why it seems deflationary?
Sorry if this seems a silly question under the circumstances.
"Markets should be free. People who are free to make money, should also br free to lose it."
Precisely the idiocy that the Wall Street guys and their Republican friends invoked to get us in this appalling situation. Wake up, dope! It's your money they've been left free to lose. Hope you enjoy it.
J6Ps, wake up! It's not too late to save the American way of life ... something that is well on its way to becoming a memory, the stuff of legend and fairy tales. Just say "NO" before there's nothing left. Nothing short of a populist revolt can save the country.
aked kings writes:
Re: " the root cause of our financial system's stresses."
The root cause of this chaos is the direct corruption that links CEOs to accounting fraud, bad bets and shit regulations that distort accounting reality...
AND americans that want it now, and want it now on borrowed dollars, did not save and forgot the little thingie about the storing up grain for the seven lean years, etc. Blaming it all on greedy CEOs and not on greeding citizens in general reminds me of what my dad said when he came back from Germany at the end of WWII...The whole country had been surrounded and taken over by just five NAZIs...nobody was a NAZI or ever met one....Right!
I would not be surprised if the gains didn't survive the day. Everyone is going to see this for what it is: the last opportunity to take your money and run.
What are you guys talking about telling us to "tell your Congressman no! You can still stop it!".
Did you guys not realize when this happened with the stimulus checks and the Housing Bill-out?! Did all of our calls, etc. make a darn bit of difference?
The only way to win is to elect someone other than Obama or McCain... let's change the rules of the game on them for a change!
can we get a comment on the RTC comparisons? Seems to me it is kind of an apples and oranges comparison though.
The govt was on the hook in the S&L scandal as these were all FDIC insured deposits at risk...the government basically just reacted to a situation they already were put in.
Also...Europe owns a lot of this CDO crap...do we bail out them as well? won't they go under if we basically set the marks on this crap probably way below where they have them? What about the hedgies too? their stuff is market to fantasy. Seems like shoot in the foot strategy as it is right now.
I swear if we buy any of this crap from Hedge funds I am going to drink heavily and get all surly for one to two nights!
Comrade Bond Girl writes:
I would not be surprised if the gains didn't survive the day. Everyone is going to see this for what it is: the last opportunity to take your money and run.
Comrade Bond Girl | 09.19.08 - 11:11 am | #
They don't care - it's a lock down until Monday. The real story will be told Sunday night by a bleary eyed Paulson, Bernanke, Pelosi & Reid.
They are just buying time and trying to get the 'shorts' from pushing the agenda even faster.
paulson careful to tell the addict there is more cocaine in the stash.. quality, quantity and price uncertain, but I have some more I'll be bagging up over the weekend.
Comrade Dark & Stormy Night, in the new United Soviet Socialist States of America, there are no gender differences and all loyal workers of the state shall be screwed equally, excepting our Nomenklatura comrades of course.
"If the Treasury can accurately value the assets in question, and purchase them at a discount to that value, and later sell at above that discount,"
SRC - Just how is a BBB tranche of a CDO which is selling for 30 cents on the dollar now, going to be valued at more than $0.30 later? Do you understand how the various tranches are paid and valued. These are derivatives. There is no collateral.
"simply noting similarities to the original RTC concept, which I believe did yield a paper profit to the government."
Honest mistake, as this is what most folks think. Most think this RTC II will be purchasing loans, as did the first RTC. It will not. The new RTC II will be purchasing OTC derivatives, which is not the same, can not be valued the same, and will does not have collateral. Paulson is pulling a fast one on us.
(OT) Yes, this is slightly OT, but it was just so shocking to me that I had to share.
I have a modest-sized HELOC, interest-only payments, with a low balance, left over from when I did a piggy-back refi a few years ago.
This morning I got a call from my bank about it. Naturally, with events as they are, what I expected was that they were calling to say the the full amount was due immediately, that the credit line was being reduced, etc.
Is everybody sitting down? The bank was calling me to let me know I could raise the line dramatically, borrow against it, and if I did it before the end of the month they'd offer me an interest rate of...wait for it...wait...Prime minus 75 bp. FOR THE LIFE OF THE LOAN!!!
I agree completely Dryfly. That is the real insanity here. They are just screwing with people before the inevitable happens. The whole time. Let's let Lehman fail and other forced corporate restructurings before we move on a bailout for the whole damn system. Let's engineer the mother of all short squeezes before reality sets in and everyone realizes the Treasury can't change the fundamentals. It is hard to wrap my head around the black hole that is this administration's legacy. Treasury is now upping the amout of FnF paper they are buying.
The Govt(surrogates of the elite class), will do anything and everything to survive in power, even if it impoverishes the middle class by loading up debt.
That's the way it was and is...
There is a club for the rich and you are not part of it, to paraphrase G.Carlin.
If you ignore the fiction of the 79.9% holding in AIG and count that as 'on the books' doesn't the minimum realistic estimate of the new RTC added on top of our other recent national purchases, bring our national debt well over $11 trillion.... the doubling of our national debt from $5.5 trillion in 2000. A true accomplishment! ...Am I being reasonable in this estimate?...
The Fed's daily report gave 30 day A2 vs AA CP at 602 vs 241 last night. And, for 60 or 90, it was, well:
"Trade data insufficient to support calculation of the 60-day A2/P2 nonfinancial and 90-day A2/P2 nonfinancial rates for September 18, 2008."
With the probability of further MM runs way down, and a facility in place to mediate around the CP market freeze, these numbers should be way better today.
@Fair Economist: If you're around, this was right out of the PennCentral playbook, with the added touch of springing the liquidity trap, even if only temporarily, with just the promise of credit inflation via the "Treasury/Politicians Fix Everything" deal.
Pretty impressive broken field running, all in all.
Nothing more to watch at this accident scene. Next will be to see how the options market and the short ETF's and rate of return swaps wire around the short restrictions, if in fact not even those market makers can short.
EXCERPT FROM RULE XXV OF THE STANDING RULES OF THE SENATE
1. The following standing committees shall be appointed at the commencement of each Congress, and shall continue and have the power to act until their successors are appointed, with leave to report by bill or otherwise on matters within their respective jurisdictions:
(i) Committee on Finance, to which committee shall be referred all proposed legislation, messages, petitions, memorials, and other matters relating to the following subjects:
Bonded debt of the United States, except as provided in the Congressional Budget Act of 1974.
Oversight and Investigations
Chairman Melvin L. Watt (NC) leads the subcommittee, which conducts oversight of the agencies, departments, and programs under the Committees jurisdiction. The subcommittee also conducts investigations on any matter within the jurisdiction of the Committee, and evaluates the need for any legislative changes to the laws and programs within this jurisdiction.
Here seems to be a Mark Foley/ FEMA-like Brown retard! I wonder if SIFMA has this under control here???
listen, I am not happy with the current circumstances, however, since we are not part of the elite, we will just have to eat it!!
The only issue remaining is how do we reduce the damage to our selves.
No answer!!!
What I am doing is cash in the mattress and short term t-bills. I would rather to bleed slowly from inflation than the lost of my entire investment in the stock market!!!
Everyone loading up on SKF and other inverse funds...
Ask yourself how these funds work. Most (if not all) do not simply short the underlying stocks, but instead hold an equity swap.
If you are buying one of these, do you know who your counter-party is, and what their ability to pay off will be in the event that the gains you are hoping for from the crash of that particular underlying index comes to fruition?
I have a feeling comrades Bush, Paulson, Cox and Bernanke will be in no rush to bail out the portion of the derivatives market that enables the ultra-short funds to exist.
I'm all for buying protection at reasonable prices (and all PUTs I've looked at today seem to fail that test for obvious reasons), but insurance is only as good as the underwriter.
The WTO issued it's first ever "Recommendations for American Workers by the Association of Non-American Lenders." The document, also known as RAW ANAL, suggests a lower standard of living, higher taxes, and fewer government services. Sources close to Washington have indicated that the suggestions would be implemented immediately.
Distribution has already started, and American workers can expect to receive RAW ANAL over the next few weeks and months.
They know it is nothing like the original, but they also need to sell it to J6P.
Look, some people on this board think RTC returned a profit to govt!!!! Are you kidding me? Who wouldn't want to attach the current idea to a past meme like this.
If short sales as result of new options positions are not permitted, what value do my new put options have if i bought them today for "open" in a cash account?
It's interesting as the plainness of the nomenclature shows just how far the credit crisis has changed everything.
This started with the great sounding "Bear Stearns High Grade Structured Credit Strategies Enhanced Leveraged Fund " hedge fund which collapsed, a great sounding name which obscured the problems underlying the assets.
Now we are at the plan & simple "TARP" which stands for the simple and obvious "Troubled Asset Relief Program".
Rather a nice metaphor for the financial markets themselves - giving up deliberately obscured AAAness in favor of transparency...
@probert:
If short sales as result of new options positions are not permitted, what value do my new put options have if i bought them today for "open" in a cash account?
Your puts are fine. Your counterparty is the Options Clearing Corp. The writer of your put would normally short some percentage of the size you bot, but he can write "naked," which just means he's taking the downside risk on his book with daily mark to market.
What it will mean, if all put writing has to be naked writing (and I still can't believe that will be the case) is that the price of puts (and call, then, too, by the way) will have to go up.
All right, unemployment in the Great Depression only got up to 25%. (I knew it was one of those round numbers -- but was remembering the stories of men coming to grandma's back door in the late evening to see if there were any scraps from her table they could take home, and I got carried away. And I am not a real estate agent, though as to whether I'm Hank Paulson ... )
What's happening currently should be very closely watched by everyone...regardless of if you are interested or not interested in the market. Why?
Because for probably the first time, we are seeing a nice but even now small glimpse into the fraud, the sham, and the crookery of what is called the US stock market and US economy.
These fkers are like a bunch of mafia people in a house where someone accidentally tripped while carrying a bundle of money, the money hit the front door and accidentally opened it at the same time you are walking your dog and passing that house.
You look inside momentarily to see piles of money, drugs, and whatever else before they close the door on you.
Wall Street is a complete scam. It's no wonder 70% of the worlds population lives in poverty...so some fk can make a few bucks from his computer everyday.
The bailout and injection of money is a clear indicator that no matter what these companies do, they will be backed and helped up again. And again, and again.
Very clever. Describe the problem as "illiquid assets" that are "clogging" our otherwise fine financial system. That was the solution presents itself: remove the "clog".
For those who are having trouble getting their minds around the issue, imagine that GM, Ford and Chrysler came to Washington and said that their "illiquid assets" (SUV's and Hummers) were "clogging" our otherwise fine automobile industry. Would everybody be agreeing that the solution was for the taxpayer to buy those assets so that the auto companies could return to their otherwise fine business of producing cars, jobs and profits for the American people? Of course not. Most people would say "let them fail". Most people would recognize that there is plenty of capital, equipment and talent that would form new companies, or move to better managed existing companies, and that soon we would be seeing the fruits of that "creative destruction" without spending a penny of taxpayer money. Can somebody explain why banks should be any different? There are trillions of dollars in cash on the sidelines looking for a safe investment. If American investment banks fail, others will rush in. No, these political hacks are not bailing out "the system", they are bailing out their buddies, their sponsors and the establishment.
Listen to the soothing words about the risks to "our" financial system. Sorry, but I don't remember being invited to sit in on any bank board meetings while the decisions were made to acquire these "illiquid" assets. And I certainly haven't seen any clogs in my financial system. Perhaps that's because I paid attention, kept my money out of risky banks and stuck to my knitting. Yet now the problems of the profligate and connected are "our" problems. How convenient.
All this from the Interactive Broker's website (I think you don't have to be a client to see it,under the Trading/Shortable Stocks tab on the menu).
This is exactly what I wrote about in post last night: enforce t+3, which allows legitimate purpose short sales, but makes the deliberate short attacks, with the complicity of the prime brokers who would let the fail slide a week or more, much, much harder.
This, in fact, is not so bad.
"The rules, which have been released on an interim basis until at least October 1, 2008, require market participants to meet their delivery obligations for stock and other deliverable securities on the scheduled settlement date (generally three business days after the sale transaction date, or "T+3"). Firms who fail to comply with the new rules will be subject to fines and/or sanctions.
The new rules create a defense against short sellers who, either by intent or otherwise, fail to deliver the stock that they transacted. There are several provisions in the rules describing actions that may or must be taken by the broker/dealer/clearer when they are unable to meet their delivery obligations. Clients interested in understanding the rules as announced by the SEC can find them at: Press Release: SEC Issues New Rules to Protect Investors Against Naked Short Selling Abuses; 2008-204; Sept. 17, 2008
Due to the short notification of the new rules, Interactive Brokers will deploy our implementation in phases, the first phase being an automated buy-in when we are unable to meet delivery obligations. If we are unable to make delivery on stock sold short by our clients for any reason, we will repurchase the sold shares as soon as we determine that we are unable to make actual delivery on settlement day or as soon as is practical thereafter. These "buy-ins" will be applied to the client accounts who initiated the short transactions and are unable to make timely delivery. Regrettably, the timeline required by the rules will provide little opportunity for advance communications to clients."
Profits are privatized ..losses are socialized
Americans ..we need to STOP this insane plan which is nothing but a bailout of the share prices of the already
wealthy. I encourage everyone to fax their representatives objecting to this departure from a free market economy to a systematic reward system for the corrupt. Remember N. Bush with the Silverado S&L debacle
and J. McCain and the Keating Five. BAILOUTS DO NOT WORK!
We are back in the same predicament. STOP THIS INSANITY before our children are in hock for perpetuity.
second?
The list of people who deserve to be shot keeps growing.
A hundred billion here, a hundred billion there...
No, I'm sorry. I can't even joke about this crap anymore.
Shot?!?
I don't think anyone of the folks to blame are going to get anything close to what they deserve in this lifetime.
This is a job for judgement in the afterlife!
Paulson's decimal point is a digit too far to the left.
you know, if one of the presidential candidates would refute this plan, they would have my vote. And the vote of the "silent majority"
Hundreds of billions of dollars to buy financial assets from banks.
Are they completely insane?
Did he just say that regulation is an important discussion for another day?
Just bail out those banks, no regulatory consequences?
you know, if one of the presidential candidates would refute this plan, they would have my vote. And the vote of the "silent majority"
badger boy | 09.19.08 - 10:22 am | #
the candidate who refutes this plan loses the election. such is the dismal state of our country.
It'll be $500b +...he doesn't know it just yet.
biggest load of crap I've ever heard.
"bad loans".....
You naughty, naughty homeowners...YOU caused all of this.
Left out is his former industry's greed, avarice and general lack of any risk management.
But stick us with the bill.
Asshat
Ciao
MS
Well i guess I'm buying more gold.
I'm glad they still 'talk' about moral hazard and inflation.
comrades,
please short glod + sliver. I would like to purchase more at ammiable price.
nochtovia,
comrade badger
p.s. I used to live in Ithaca, and our mayor was a member of the Communist party. No joke.
It'll be $500b +...he doesn't know it just yet.
NAVSPECWARCOM | 09.19.08 - 10:23 am | #
closer to, if not > than, 1t.
I notice Paulson couldn't run fast enough from the press. Heads on pikes is the only cure for this.
I honestly can not believe the way this is unfolding, right in front of my eyes.
did he just say he wants a bigger bazooka?
guess the criminals win again..it looks like a total bailout of the casino players
Does anybody have a YouTube link to this great Wle E Coyote moment?
He's sitting before a great computer that he has built... punches in, nervously...
Rock
Falling
What
Do
I
DO???
And out comes the ticker tape:
"Go back and take your medicine!"
One dollar for every star in the universe
Yeah, right. Like he can assign a value to anything right now.
This plan requires congressional approval.
YOU MUST CALL YOUR CONGRESSPERSONS NOW AND TELL THEM NO ON BAILOUT!
Contact Elected Officials: USA.gov
Paulson must be stopped.
JD: $1T+ would not surprise me either. One's Wall Street turns in their toxic assets abd it will be published our eyes will be the size of saucer plates...
Where is the meeting up with the pitchforks? I know how to make some good smoky torches out of used deep fry oil. Who's game?
Hope the markets give a big middle finger to this plan. Fill the gap! Fill the gap!
Just where the hayfield is all this money supposed to come from?!
From CNBC: The cost so far (does not include swap agreements by the Fed with foreign central banks)
What are all the Chicago School folks saying about this? Or was it ok to trash somebody else's economy during the experimentation phase, but now that they got the chance to try it here - all bets are off?
Shock and Awe, indeed.
First you can't short financials, next step is you can't go long gold or gold stocks.
(Bloomberg) -- The market storm that brought down Lehman Brothers Holdings Inc., American International Group Inc. and other pillars of U.S. finance may have also blown holes in the portfolios of House Speaker Nancy Pelosi, Senator John Kerry and more than 50 other members of Congress.
Pelosi, in her most recent financial disclosure form, reported that her husband owned between $250,000 and $500,000 of stock in AIG, which ceded majority control to the U.S. government this week in exchange for $85 billion of loans.
Kerry, the 2004 Democratic presidential nominee, disclosed that his wife, Teresa Heinz Kerry, had more than $2 million of AIG stock at the end of 2007, when shares were worth $58.30. AIG has fallen 85 percent this week to close yesterday at $2.69. The lawmakers' aides didn't respond to calls seeking comment.
Altogether, 56 senators and representatives had stakes in AIG, Lehman, Fannie Mae, Freddie Mac, Bear Stearns Cos. or IndyMac Bancorp Inc. -- some of the biggest casualties of the market bloodbath, according to the Center for Responsive Politics. The most recent annual disclosure filings list investments as of Dec. 31, 2007, and reveal the size of holdings only within a range of values. Lawmakers may have sold shares since then.
Lawmakers, like everyone else in America who has any kind of retirement portfolio or stock holdings, are going to be suffering,'' said Gary Kalman, a lobbyist for the Boston-based U.S. Public Interest Research Group, a consumer-advocacy organization.This is a serious issue. We need to have a serious response.''
I'm all for it - as long as they simultaneously enact the appropriate taxes to pay for it over the next 15 years.
While they're at it, we might as well enact the tax measures required to eliminate the deficit in 5 years.
Oh, and let's actually start paying down the existing national debt.
Then, we'll be back on solid financial footing for the next generation.
After quite a bit more reaming of JoeSixPack has occurred we can look forward to a surge in populism followed by the anointment of a benevolent dictator.
Rome as you have known it all of your life is soon to be gone like a fart in the wind.
That guy Paulson called on who asked him what he threatened congress with will never get called on again. Paulson slithered out like a snake.
anyone having a problem trying to log into their fidelity.com website?
isnt the plan backwards ???
the government should be buying all the good assets from the banks
and
then leave the rotten mucous filled maggot ridden carcass to decay into the earth...
and form a new national bank...since we the people (taxpayers) are gonna own it...lets OWN IT
Shorter Hank:
"Avast ye, taxpayers!"
Just where the hayfield is all this money supposed to come from?!
Sethra007 | 09.19.08 - 10:27 am | #
I guess you missed my earlier comment re: trucks with new machinery outside the U.S. mint.
I can't access my Fidelity account!!! Arrrghhh.
Ya know, I realize we're all getting numb to the numbers. But doesn't hundreds of billions of dollars mean a lot of money for a country of 300 million? Maybe 150 millions working age people?
Sounds the the government is moving debt around, that could be $50,000 or more for every worker. It is truly massive scale manipulation.
TD Ameritrade is timing out right away when you log in....
CR - I think you've created a monster. Now you are tied down 24/7.
I wonder if he has any plans to 'sit down with a calculator' and figure things out.
How are we going to fight the current wars that we are fighting and fight the bailout-war?
I dub thee, "The Monopoly Society"...
Hey wait.......how much did they say the Iraq war was gonna cost?
gm,
I'm having trouble with my own discount broker; I figure it's a widespread problem this a.m.
And I'm very curious to know about SKF's status.
In case anyone is interested, one trillion dollars ( what Comrade Paulson is going to spend) looks like this:
$1,000,000,000,000
To try and understand how FUKED we are:
6 months ago
OMFG
I guess that people here don't have jobs they would like to keep? If nothing is done, and no business can borrow (as is the case today), lots of those jobs are disappearing, and lots of other companies are likely to go bankrupt. What is the wonderful plan to avoid this outcome that the naysayers have? And what do they know that Bernanke and Paulson don't?
mock turtle writes:
isnt the plan backwards ???
Even worse, if they were going to initiate this, shoudln't they have bailed out AIG, LEH, MER et. al.
Class action lawsuit should be initiated.
How nice of the Chinese to pay for all of this.
Everyone is having trouble trading - too much volume
Well this should be good for the dollar.
Outsider, yeah, right now that is true!
Here is the name based on Paulson's comments:
Troubled Asset Relief Program (TARP).
Apparently the tarp hides all of Wall Street's sins.
Best to all.
JS writes:
How nice of the Chinese to pay for all of this.
Pray they continue.
You crack me up CR
Just sitting here watching 'Casino' on the USA network. Appropriate, no?
You can't make this stuff up (throws up hands)
JS, FED UP,
Yeah, that's the end game.
Short US Treasuries if you can.
dopes....
OH MY GOD!!!
Indications on SKF is 56!!!!!1!!!
TARP...an instant classic! Priceless...
the only way jsp wins is if he starts using another currency to effect trade for obligations
We need a list of people who respond to this with "What's done is done."
It's comforting to know we have the best and brightest working on the problem.
Hail Caesar.
So Paulson's now running the country for the greater good of Goldman Sacks? And the prez and the congress have decided to just go hide.
And it all happened without anybody firing a shot.
Lots of Preparation H commericals on CNBC-XM today.
Just sayin'.
CR: I guess we know the name: Troubled Asset Relief Program (TARP). The tarp hides all sins.
LOL! ! ! ! !
.....
A trillion dollars will buy an entire years worth of oil for the USA.
Everybody ride bicycle for one year. There you go!
CR -
I like TARP, and think of all those freshly foreclosed on, unemployed construction workers with all those really sharp utility knives!
@jd, i missed that comment. was that a joke, or are they actually setting up new "printing presses"?
Ross writes:
Just sitting here watching 'Casino' on the USA network. Appropriate, no?
Accompanying music
YouTube - Casino Nation
I guess that people here don't have jobs they would like to keep? If nothing is done, and no business can borrow (as is the case today), lots of those jobs are disappearing, and lots of other companies are likely to go bankrupt. What is the wonderful plan to avoid this outcome that the naysayers have? And what do they know that Bernanke and Paulson don't?
David in NY | 09.19.08 - 10:31 am | #
Markets should be free. People who are free to make money, should also br free to lose it.
SKF @ 93 per my broker. It would make no sense to be as low as 50s because it has a NAV and XLF is now up only 10%.
Calculated Risk writes:
Outsider, yeah, right now that is true!
Here is the name based on Paulson's comments:
Troubled Asset Relief Program (TARP).
Apparently the tarp hides all of Wall Street's sins.
This reminds me of the travesty that was the Iraq war's first name:
Operation Iraqi Liberation or OIL
until it was changed for obvious reasons.
I can't wait for j6pack to wake up with that thudding headache, tied up, unable to speak with that Mongolian ball gag, and wondering where the hell he is and what is about to happen...
Marketwatch has SKF down 45% and trading halted. Holy crap.
On a completely unrelated subject, I don't see anything in the SEC's new guidelines that would prohibit shorting UYG. Ahem.
-Jaso
Ian,
don't forget to take the actual delivery...and bury it when no one can see you
Here's a chart of <a href="http://img49.imageshack.us/my.php?image=iwmvalidtradelmaokk6.png>IWM showing its allegedly valid pre-market trade up $160 - may they rest in peace.
...I guess we know the name: Troubled Asset Relief Program (TARP). The tarp hides all sins.
Seems more like a TRAP
Credit Relief Asset Program (CRAP)
I just saw a guy runing like mad shouting:
"The printing presses are coming! /the printing presses are coming!"
I just thought was strange he was riding a horse and dressed like was XVIII century.
On other note: hiperinflation, this is USA.
If the Treasury can accurately value the assets in question, and purchase them at a discount to that value, and later sell at above that discount, this could be good both for the Treasury and for the financial system and the wider economy that depends on credit for working capital. The banks still get spanked by selling assets at well below what they paid for them, and will be more prudent for some time into the future. Perhaps by then intelligent regulations (such as regulating CDS as "insurance") may be in effect.
And the process of determining the value of the illiquid assets may help them to become more liquid, so that the Treasury may not have to purchase all that much.
It's a disagreeable solution, but not as disagreeable as the alternative. The real economy requires working capital, and most companies today rely on borrowings for that.
Über-Comrade David in NY writes:
I guess that people here don't have jobs they would like to keep?
Yeah, and if the government bought out every single business and employed everyone we'd have full employment. Wheee!
I've got SKF at $93 as well on Yahoo (down 22%), but the real time quotes that Yahoo usually gives are stuck at $92.98 from 9:33 EST. It's freakin' one hour past that. I tried to buy some on Fidelity, but when I hit the submit order button it dies on me.
(CNN) -- Republican presidential candidate Sen. John McCain said Friday morning he would establish a new agency to deal with the U.S. financial crisis that many experts say is the worst since the Great Depression....
That agency, a mortgage and financial institutions trust, would work with the private sector and regulators to identify institutions that are weak and fix them before they go broke.
---Mortgage Financial Institutions Trust
hummmm
Mother, F---ers, In, Trouble
People are taking notice. "764 Visitors Online" on a Friday morning.
SRC,
You must be a plant from either NY or Washington. Has that been done with anything our government has done over the past month?
SKF halted at opening?
Can you still buy/sell, at the $93 open price? Or are people effectively frozen into their skf holdings????
I guess we know the name: Troubled Asset Relief Program (TARP). The tarp hides all sins.
Please, this needs to be quoted in an article in the MSM, somewhere. Please, someone, viral this quote. Pure genius
It is not so bad being a communist.
As far as the glorious plan I have two things to say:
Unintended Consequences
and
Blowback
that's it..
I'm going to stick a gun in my mouth. I've lost everything
I've got SKF at $93 as well on Yahoo (down 22%), but the real time quotes that Yahoo usually gives are stuck at $92.98 from 9:33 EST. It's freakin' one hour past that. I tried to buy some on Fidelity, but when I hit the submit order button it dies on me.
it's halted. i'm trying to find out if its by SEC order or if the market maker simply cannot balance order flow.
In hard times, tent cities rise across the country:
Within weeks, more than 150 people were living in tents big and small, barely a foot apart in a patch of dirt slated to be a parking lot for a campus of shelters Reno is building for its homeless population. Like many other cities, Reno has found itself with a "tent city" an encampment of people who had nowhere else to go.
From Seattle to Athens, Ga., homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.
Nearly 61 percent of local and state homeless coalitions say they've experienced a rise in homelessness since the foreclosure crisis began in 2007, according to a report by the National Coalition for the Homeless.
The article requested is no longer available.
So through a variety of positive feedback loops created from the sale of loans and the use of securitised loans as collateral , trillions of virtual money was inadvertently created by the financial system.
& now the US government just went and monetised it.
I guess the inflationista's were right all along.
interesting times -- w
My broker's execution shows bought for $96 @9:45, last trade $93 @ 9:33 - yeah, something's wrong here.
812 visitors. Is something happening?
More like the Congressional Relief for Assets Program
ok, my fidelity is back up
Saving Taxpayer Equity And Loans.
Now we know. Government by and for the rich. Now we know.
So if Joe Sixpack makes bad investments and can't pay his bills, The Powers That Be basically tell him to go starve in a ditch. If Malfeasance Megabucks III makes bad investments and can't pay his bills, The Powers That Be give him money, pat him on the bottom and tell him to be a good boy in future.
Why am I not surprised?
Bush to tell us the economy is fundamentally sound and SHORT T-BILLS!
TARP- TOTALLY ASSININE RECOVER PLAN
On other note: hiperinflation, this is USA.
Why does it FEEL so much like the money supply is shrinking? This is crazy what's going on. They are pumping money in and... there is no money so anyone can do anything. That's deflation. I really want to know. If for sure inflation, I'll take out a fixed rate mortgage tomorrow and throw the cash into oil and silver.
I hate the word Stagflation. That's what happens when the nasty mother-in-law to be accidentally stumbles into the bachelor party. We need another word.
Nice Nemo.
SRC wrote:
"If the Treasury can accurately value the assets in question, and purchase them at a discount to that value, and later sell at above that discount, this could be good both for the Treasury and for the financial system and the wider economy that depends on credit for working capital. The banks still get spanked by selling assets at well below what they paid for them, and will be more prudent for some time into the future. Perhaps by then intelligent regulations (such as regulating CDS as "insurance") may be in effect."
So, you are saying that the GOVERNMENT can value assets better than the MARKET?
lol
Look, I think you are a commie...
Or well, Paulson too is...
This is the begingin of the nationalization of our banking system. We all knew it would come to this.
Anyone have any recomendations for high yielding money market funds?
Bush on at 10:45.
It's a disagreeable solution, but not as disagreeable as the alternative. The real economy requires working capital, and most companies today rely on borrowings for that.
SRC | 09.19.08 - 10:39 am |
Many also rely on consumer and public sector spending on their products. Now that trillions (and, it will be trillions) are being diverted away from middle-class taxpayers, those same companies probably won't be borrowing. They won't be borrowing to finance growth anyway.
Is something happening!?!?!?!
Only unprecedented intervention in the financial system, much of which is on dubious legal ground.
I cannot believe what's happening.
You better pray McSame is not elected. If McCain wins, not a one of the crooks who ran our country into th egutter will be prosecuted. Not one!
and house prices are still to high
Hi YLSP,
Your intelligence regarding my provenance is inaccurate. I'm simply noting similarities to the original RTC concept, which I believe did yield a paper profit to the government. I don't like the socialist bent of the actions of the last two weeks, but if banks don't lend to companies, there will be a radical contraction in economic activity. It is not only financial institions that use credit to leverage. "Normal" real economy companies do that too, and if they are obliged to deleverage, many may be obliged to contract their operations.
It appears to me that the problem is not bank failure, but bank reluctance to lend -- the seizure in the credit markets. If banks stop supplying working capital to corporations, where will they get it? Will the general public purchase commericial paper? I doubt it. So it appears to me that Paulson & Co are tying to avert a calamity in the real economy.
PeakVT writes:
Bush on at 10:45.
Then market crashes by noon.
Congress Raids American's Pockets
Paulson:
"We must now - because the Republicans chances of staying in the White House are being flushed down the drain - take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses."
Unbelievable!!
Ministry of Truth writes:
Anyone have any recomendations for high yielding money market funds?
Seriously, pick one. It doesn't matter. Didn't you hear the gumbint is going to guarantee them all for one year? Free ponies for everyone!
I feel sorry for all the shorts in this blog.
blackhat writes:
PeakVT writes:
Bush on at 10:45.
Then market crashes by noon.
Yeah, I heard that and cashed out all my long equity positions. I am not kidding. Now I'll actually be ahead.
Arrrr!
Anybody think all this maneuvering will actually stabilize the markets? I have this sinking feeling that there is no safe haven, the last harbor got caught in the pyroclastic flow from the eruption.
At least our foundation is strong.
Foundation = American Worker
American Worker = Tax Dollars
Tax Dollars = Republican's Solution
Republican's Solution = Rich get Richer
drob writes:
I feel sorry for all the shorts in this blog.
Why? I doubled down on the open and am currently green; I'm just wanting SKF to start trading again.
Fed's Asshole Relief Trust (FART)
Funny, I've got a new house with a bad roof, it's getting fixed in a week but during hanna I had to put a tarp over a large section of it. The tarp cut down on the leaks but a decent amount still got through.
Woohoo I'm an allegory!
The shorts are well capitalized... you need not worry.
Flash back to 1929 and the efforts back then to stabilize the markets. When does Buffett come down to the floor of the NYSE?
SKF
Lat: 93.00
Bid: 0.01
Ask: 125.02
Spread: 125.01
Doesn't happen everyday.
Insuring money markets, taking shite assets from private companies...
sigh
This is so far from an "RTC".
The RTC was one of the most draconian goverment solutions ever invented. The FDIC took over hundreds of banks/thrifts. It wiped out share holders, preferred holders and subordinated debt holders. The Justice Department often prosecuted the boards and management. Many served jail time. Bill Siedman, the head of the RTC, unceremoniously dumped collateral assets and tanked prices. The total cost to the taxpayer went exclusively to paying off INSURED depositors, not Wall Street.
Now, what part of this plan sounds like that?
Troubled Asset Relief Program (TARP). The tarp hides all sins.
Not only is it hiding sins, it is protecting assets that shouldn't exist anymore. Instead of propping up the stuff, it should be liquidated and gotten rid of. I'm worried that this new "RTC-like" entity is going to keep the shitburgers around forever.
folks -- in the future -- if anything you have is halted, check nyse/arcanet. it looks like they simply had an imbalanced book.
"It is not so bad being a communist."
You'd think we would have health care as communists.
SRC wrote: If the Treasury can accurately value the assets in question, and purchase them at a discount to that value, and later sell at above that discount, this could be good both for the Treasury and for the financial system and the wider economy that depends on credit for working capital.
SRC,
You have 3 ifs in front of one possible outcome.
I wouldn't go to Vegas on that.
There is good money out there, just none that want that want to help current banks. Raise interest rates, protect the dollar, protect savers, dump the consumption economy. IMO, it needs to be done.
Does this mean we no longer have to make our house payment?
Darkness,
large amounts of fictitious money - in the sense that if the system worked as textbook it shouldn't have been - was created.
Now that money (and some real money along with it), is being destroyed.
The government in the meantime, thinks it is pumping water onto the inferno, but since it doesn't understand the underlying systemic problem - is actually spraying on gasoline.
Sing near my god to thee...
-- w
TARP? Good one.
Even better, Paulson can go to WARP later (Worthless Asset Protection Program).
And just in case any of you were getting some crazy idea to go into PMs instead of the equity market where you are meant to be, you will now need to ante up a bit more margin:
Comex Raises Margin Rates on Gold Contracts by 47%, Silver 20% by Stuart Wallace Sept. 19 (Bloomberg) -- The Comex division of the New York Mercantile Exchange raised margin payments on gold and silver futures by as much as 47 percent after price swings accelerated.
The margin rate for Comex members advances to $5,500 a gold contract from today, from $3,750, the exchange said in an e- mailed statement late yesterday. The new rate for non-members is $7,425, from $5,063. One contract represents 100 ounces.
For silver futures, members will pay a margin rate of $6,000, compared with $5,000 previously. Non-members will pay $8,100, from $6,750. One silver contract represents 5,000 ounces.
Only when necessary, like Iraq. Makes sense.
I'm tired of yet another op. to buy puts.
Just get it over with already.....
Spreads are effing ridiculous on most puts. They are just not willing to write them.
Yea this will work out just fine.
They left off SBUX from the list....would it make any difference?
Ciao
MS
Yes, I am looking for the highest yielding money market fund I can find now that they are backstopped from losses. Where can I look this stuff up?
This one is for all the Fed nay-sayers and gold bugs:
http://www.5min.com/Video/How-the-Federal-Reserve-Created-the-US-Recession-39529721
........
G writes:
SKF
Lat: 93.00
Bid: 0.01
Ask: 125.02
Spread: 125.01"
...just do not send a market order
Troubled Asset Relief Program (TARP). The tarp hides all sins.
Not so much a "TARP" as a "Hanky."
"Unprecedented action", says Bush. Understatement of his Rresidency.
sorry -- HAVE an imbalanced book
ask $115.10 bid $62.51
Great read from Wikipedia:
Savings and loan crisis - Wikipedia, the free encyclopedia
The parrellels between then and now are obvious but the magnitutde today is much worse.
Dems and Repubs play good cop, bad cop while screwing everyone without seven homes and $5 mil a year income.
ALSO: New RTC should be called the Mortgage Investments Liquidation Fund (MILF)
Bush talking, market dropping.
Trillion +
This is bullshit and and and
Market down substantially since The Menace from Texas started talking.
Anonymouse --
Why not just short UYG?
Or is that banned, too?
Rob Dawg writes:
Troubled Asset Relief Program (TARP). The tarp hides all sins.
Not so much a "TARP" as a "Hanky."
That was awesome
Ministry:
Here ya go Comrade-
Checking Account | High Yield Savings Accounts | Best Money Market Account Online
The S&L Bailout: $32 billion every year for 30 years
"The $157-billion bailout was financed by floating 30-year bonds, the interest on which will make the ultimate cost much higher. The actual total will depend on what interest rates end up being between 1990 and 2020, but estimates range from $500 billion to $1.4 trillion (in other words, 1,400 billion dollars)."
Corporate Welfare The S & L Bailout: $32 billion every year for 30 years
The truth is that they had more than a year to try to unwind things in an orderly fashion, and failed miserably because they fail to understand that this is a symptom of our economic woes, not the problem.
Bushism -- "Anyone caught... Will be caught and PERSECUTED"
Did he mean executed ?
skf started - 76.91
TARP
Total Ass Rape Public.
skf closed so try XLFVV - October $22 puts on XLF .. 50,000 volume today looks like it was one trade - is way more than any other option on XLF ..
"Anyone engaging in illegal trading will be caught and persecuted." - G.W. Bush 09/19/08
Re: " the root cause of our financial system's stresses."
The root cause of this chaos is the direct corruption that links CEOs to accounting fraud, bad bets and shit regulations that distort accounting reality
MoT:
Checking Account | High Yield Savings Accounts | Best Money Market Account Online
.....
oooops SORRY . disregard previous post!!!!!!
Bush (roughly): This is to prevent investors from driving down certain stocks for personal gain.
Yeah, and driving up stocks is only done for the benefit of Mother USSRA.
The positive spin to this development???
take a ten day vacation.
then back to quasi-normal, til next options expiration
just.make.him.shut.up.
Nemo writes:
Why not just short UYG?
Greed? Shorting $10k of UYG - even if it went to 0, would yield $10k profit.
Buying SKF @ $100ish, if XLF goes down to single digits, could send SKF to the high $200s, yielding greater than $10k profit.
Bush says "this action does entail some risk, but we do anticipate that this money will be paid back."
Isn't there some underground bunker they could put this dude in?
"Anyone engaging in illegal trading will be caught and persecuted." - G.W. Bush 09/19/08
I think I heard him say "and have his sentence commuted" under his breath.
All the other short ETFs (e.g. SDS, SRS, and TWM) gapped WAY down this morning at the opening (63, 66, 58 respectively). Hope everybody loaded up on some stellar deals.
Staying away from SKF anyway...but curious as to how they are going to handle it. Just a temporary halt??? Or are people locked in until Oct 2?
just.make.him.shut.up.
Nice to know the US economy would have imploded without these moves.
Did GW just say they will prosecute shorts? WTF?
Do we still have to wait for history?
I am looking for MM funds not accounts. I want to chase some yield boys!!!
it killed me to do it, but i just went all cash.
the game is rigged, cant hedge effectively anymore.
i am not going to be long in a bear market.
This is not what a rescue effort looks like, but what a credit collapse looks like.
Steady As She Sinks.
Dark Pools Still allowing short sales...
just talked with a guy in a trenchcoat on broad st.
Oh God I hope Florida votes the right way this time.
ullpointer writes:
it killed me to do it, but i just went all cash.
the game is rigged, cant hedge effectively anymore.
i am not going to be long in a bear market.
nullpointer | 09.19.08 - 10:59 am | #
amen. i did this yesterday.
TED spread is going back up, has been since the opening this morning, so much for 'trickle down'.
WHat happens if all this money is 'created' but it never gets beyond the banks? Will we have a two-tiered monetary system?!?!?!?
I see SKF with a bid of 0.
It appears to me that the problem is not bank failure...
Absent looting from the taxpayers, many banks are insolvent. Soon, the Treasury will be too.
Does anyone believe US debt is still AAA?
Where is FFDIC? Working over the weekend?
Am I going to be persecuted for owning SKF?
I think J6P might be getting it. This morning my BF who wakes up earlier than me came back in the bedroom at 6 AM yelling " They've stopped short selling !!!(he doesn't know what short seling is, but intuited that it wasn't good) They're buying back all of the bad loans and WE have to pay for it!!!!"
The true "Pony Story" of TARP:
In Texas a lot of Quarter Horse trainers "tarp" their young horses when they break them for riding. This involves pulling the horse down with ropes, tying it so it can't get up, then hitting it with one for those blue plastic roof tarps until it stops struggling and lays still. It's supposed to make the horse docile and subservient. I think all of us just got tarped.
P.S. Since I am a woman, I decided to be a Comradess instead of a Comrade, unless any of you guys object.
Nice bid-ask spread on DSL October $2.50 puts:
Downey Financial Corp. Common Stock (DSLVZ: OPRA) PUT
Expiration Date 10/18/2008 Strike Price $2.50
Bid 0.00 Ask 4.80 Last trade 1.20
What the hell?
Did he just speak to the American people without smirking? Maybe I missed it? I also didn't see any swipes at Democrats for causing these problems. Am I wrong? I hope he's ok.
The solution to all this? more tax cuts for people who make over $600,000 per year!
Stuff them mattresses full of cash,
Me too Nullpointer. Reality will intervene in the intervention.
MarkS writes:
I see SKF with a bid of 0.
But I don't see UYG with a bid of infinity, so you know something is broken.
bearly,
No. If he meant executed he would say "brought to justice"...
We need to cut taxes by 15% and increase the minimum wage by $5.00 and have a tax holiday as well, then cut mortgage rates to 1% and then make this Ownership Society work. What about privatizing Social Security before the market in Japan opens (tonight)???
Surprise surprise...
Mortgage modification programs have failed, lawmakers told - Financial Week
Mortgage modification programs have failed, lawmakers told
Look to new programs from FHA and FDIC to reduce foreclosures nationwide
By Neil Roland
September 17, 2008
"...A study by Valparaiso University law professor Alan M. White, a member of the Federal Reserve Board's consumer advisory council, found that banks working with distressed homeowners to modify their mortgages had failed to reduce the principal balance in 98% of the 4,300 cases studied. Nearly half the loan modifications did not even reduce the monthly payment amount.
The result was that thousands of the modifications made between July 2007 and June 2008 did not prevent foreclosures."
Any chance that part of the reason for the failure of modifications to actually MODIFY loans - and, in fact, the incredible lack speed with which the servicing industry acted - has anything to do with the fact that servicers are oftentimes given late fees and modification fees as part of their "additional servicing compensation" per the terms of the Pooling & Servicing Agreements between the servicers and the RMBS trusts that they service?
Try it yourself. The Merrill Lynch Mortgage Investors Trust Series 2002 AFC-1 prospectus supplement directly from the SEC. http://www.sec.gov/Archives/edgar/data/809940/000095013002000674/d424b5.txt
Perform a Ctrl-F search on "additional servicing compensation". Then go look at a dozen other prospectuses of your choice.
There is rightly tons of anger at the Repubs, but come on, the Dems are the ones who are all hog-wild for the bailout, not the Repubs. At least McCain called for the head of the SEC to be fired.
America keeps digging herself into a bigger and bigger hole ("digging her own grave?"). Ahmadinejad is laughing so hard this morning he can hardly contain himself. This is going to have a very bad ending. Does someone have a very clever and secret plan they're going to pull out at the last minute, so that we'll all be able to say, "Wow. Didn't see that coming. Boy oh boy, was that clever."?
Here's the deal ... if you're guilty of "lax lending practices" and/or "irresponsible lending", the taxpayers shouldn't be bailing you out by buying you're "illiquid assets". Besides, there's no such thing as an "illiquid asset"; only assets with no value or assets with a bid that the seller is unwilling to accept. There are $Bs reportedly on the sidelines ready to buy these assets, just not at prices these institutions are willing to accept. Bring back the RTC, albeit with stronger management; seize the institutions that fail to meet regulatory capital requirements; liquidate their bad assets; and place their good assets and businesses in the hands of capable owners!
What would anyone expect when you've got an effort like "Hope Now" that has a member list that looks like THIS:
http://www.hopenow.com/members/members.html
Servicers/Lenders/Mortgage Market Participants
* Acqura Loan Services
* American Home Mortgage Servicing Inc. (formerly Option One)
* Assurant, Inc.
* Aurora Loan Service
* Bank of America
* Carrington Mortgage Services
* Chase
* Citigroup, Inc.
* Countrywide Financial Corporation
* EMC Mortgage Corporation
* Fannie Mae
* First Horizon Home Loans and First Tennessee Home Loans
* Freddie Mac
* GMAC ResCap
* Home Loan Services, Inc. (d/b/a First Franklin Loan Services & NationPoint Loan Services)
* HomEq Servicing
* HSBC Finance
o HSBC Consumer Lending
o HSBC Consumer Lending II
o HSBC Mortgage Services
o HSBC Mortgage Corporation
* IndyMac Federal Bank
* LandAmerica Financial Group, Inc./LoanCare Servicing Center
* Litton Loan Servicing
* MERS
* National City Mortgage Corporation
* Nationstar Mortgage, LLC.
* Ocwen Loan Servicing, LLC.
* PMI Mortgage Insurance Co.
* Radian Guaranty Inc.
* Saxon Mortgage Services
* Select Portfolio Servicing, Inc.
* State Farm Insurance Companies
* SunTrust Mortgage, Inc.
* Washington Mutual, Inc.
* Wells Fargo & Company
* Wilshire Credit Corporation
Trade Associations
* American Bankers Association
* American Financial Services Association
* American Securitization Forum
* Consumer Bankers Association
* Consumer Mortgage Coalition
* The Financial Services Roundtable
* The Housing Policy Council
* Mortgage Bankers Association
* Securities Industry and Financial Markets Associatio
WHat happens if all this money is 'created' but it never gets beyond the banks?
To solve liquidity trap, we will all get stimulus "checks" in the form of debit cards from the Fed. You can't get cash out of them, you can only use them for purchases.
I hope he's ok.
I don't. I think both parties are insane, but I have it on good authority that he's a manifestation of shiva.
Granted, not ALL of these entities are horrific - but enough of them are that I know not to be surprised by a study like Professor White's.
Oh, and all of those "bad loans" - such as my own - are NOW potentially being swept off of the lenders/note holders books if/when this new "TARP" is formed by the federal government. How many of the loans that make up CDOs/CDSs/ARSs would be performing loans were it not for bad modifications or efforts by the servicing entities to deliberately push performing loans into default?
MORTGAGES; Struggling, but Staying in a Home - NY Times
Struggling, but Staying in a Home
By Bob Tedeschi
Published: July 20, 2008
"...Meanwhile, servicers, whom investors pay to collect mortgage payments from borrowers, often have no incentive to help borrowers find the ultimate holder of a loan, Mr. DelliBovi said. "Servicers make more money on a foreclosure than when the loan is worked out," he said."
- Alfred A. DelliBovi
Chief Executive Officer
Federal Home Loan Bank of New York
To summarize:
This is temporary BS by Paulson to stave off utter market collapse. He intends that it will get defined, modified and winnowed down as it moves through the process until not much real 'bailout' is ever really provided. He has bought a bit of stability today but sooner or later the punishment must be taken.
The instability, craziness and manic mood swings of this week bode absolutely nothing for the future except the certainty that things are out of control.
Anybody who does not get their assets out of harm's way at this point has no excuse. Just as deviation from long-term standards was the tell for problems to come in housing and mortgages and investment banking, so, too, do the sweeping 'new' rules tell that major discontinuity lies ahead for stocks, banks and the US economy.
Comrade Ministry:
Money Market Rates & High Yield Savings Accounts
My take on SKF's NAV if it were trading: it should be @$105-110 given where XLF is at the moment.
anyone know if bonds are limit down?
For anybody who is planning on dying in the next 6 months to a year this plan will work out great.
For all the rest......sorry.
JS: And, McCain did this because he cares not for political reasons. Why would he risk separating himself from Bush? Why would the deregulator do this?
Warlock, sayeth:
The government in the meantime, thinks it is pumping water onto the inferno, but since it doesn't understand the underlying systemic problem - is actually spraying on gasoline.
Thanks for your reply. I'm on here to try to grasp the ungraspable, and every bit gets me closer.
I get what you're saying, but also this isn't the first application of gasoline. To carry your analogy further, it's like someone sprayed fire suppression foam over things before the Bradburian firemen arrived.
Churn fits into this somewhere, I just know it does. These people made their money moving money around. Speeding money up makes it look like more of itself, and slowing it down, like less. Is that part of why it seems deflationary?
Sorry if this seems a silly question under the circumstances.
askin writes:s
anyone know if bonds are limit down?
Don't know if they were earlier; but yields have pulled back somewhat (looks like a shooting star)
As I said in a previous thread,
"I am in cash in the mattress and short term T-Bills"
No one will get out alive!
I would rather "bleed slowly to death" as opposed to losing everything in the stock market in the "blink of an eye".
Just remember, the US way, "every dog for themselves".
"Markets should be free. People who are free to make money, should also br free to lose it."
Precisely the idiocy that the Wall Street guys and their Republican friends invoked to get us in this appalling situation. Wake up, dope! It's your money they've been left free to lose. Hope you enjoy it.
Comrade Anonymouse , skf as an etf maybe broken with the ban. don't know what will happen if you own some.
J6Ps, wake up! It's not too late to save the American way of life ... something that is well on its way to becoming a memory, the stuff of legend and fairy tales. Just say "NO" before there's nothing left. Nothing short of a populist revolt can save the country.
Ratigan is all over this problem.
Nice to see one CNBC reporter with clear vision.
Paulson drank a bottle of 1787 Chateau Lafite and is now pissing on a house ablaze. Good luck dumbass.
I think he meant pardoned.
New comment Comrades. Party has moved yet again. Don't forget the booze.
Good to know all shorts are "terrirists" now
Man I was pissed I bleew out of SKF and missed the runup to 150, but now it is NO BID. Zero.
SKF-WTF
I think he meant pardoned.
4tehlulz | 09.19.08 - 11:08 am | #
I think he meant waterboarded
aked kings writes:
Re: " the root cause of our financial system's stresses."
The root cause of this chaos is the direct corruption that links CEOs to accounting fraud, bad bets and shit regulations that distort accounting reality...
AND americans that want it now, and want it now on borrowed dollars, did not save and forgot the little thingie about the storing up grain for the seven lean years, etc. Blaming it all on greedy CEOs and not on greeding citizens in general reminds me of what my dad said when he came back from Germany at the end of WWII...The whole country had been surrounded and taken over by just five NAZIs...nobody was a NAZI or ever met one....Right!
First they confiscate your SKF then they confiscate your Gold.
Better to be powerful then right
I would not be surprised if the gains didn't survive the day. Everyone is going to see this for what it is: the last opportunity to take your money and run.
Bush on at 10:45.
I'm going to cut the cable to my house to avoid even the smallest chance of hearing what he has to say. Now where's that axe?
Darkness writes:
Where is the meeting up with the pitchforks? I know how to make some good smoky torches out of used deep fry oil. Who's game?
I'm up for it.
Uh oh, here comes Gasbag to front the next move.
Dan in Calgary,
It's to late!!!
Its already baked in the cake!
The issue now is when will you let the rest of the US and the World know!!!
What are you guys talking about telling us to "tell your Congressman no! You can still stop it!".
Did you guys not realize when this happened with the stimulus checks and the Housing Bill-out?! Did all of our calls, etc. make a darn bit of difference?
The only way to win is to elect someone other than Obama or McCain... let's change the rules of the game on them for a change!
"Hope the markets give a big middle finger to this plan. Fill the gap! Fill the gap!"
Yes, I'm sure the markets will say no to free money. After all, there are free market principles involved here! Hahahahahahaha.
CR,
can we get a comment on the RTC comparisons? Seems to me it is kind of an apples and oranges comparison though.
The govt was on the hook in the S&L scandal as these were all FDIC insured deposits at risk...the government basically just reacted to a situation they already were put in.
Also...Europe owns a lot of this CDO crap...do we bail out them as well? won't they go under if we basically set the marks on this crap probably way below where they have them? What about the hedgies too? their stuff is market to fantasy. Seems like shoot in the foot strategy as it is right now.
I swear if we buy any of this crap from Hedge funds I am going to drink heavily and get all surly for one to two nights!
Comrade Bond Girl writes:
I would not be surprised if the gains didn't survive the day. Everyone is going to see this for what it is: the last opportunity to take your money and run.
Comrade Bond Girl | 09.19.08 - 11:11 am | #
They don't care - it's a lock down until Monday. The real story will be told Sunday night by a bleary eyed Paulson, Bernanke, Pelosi & Reid.
They are just buying time and trying to get the 'shorts' from pushing the agenda even faster.
JMHO.
paulson careful to tell the addict there is more cocaine in the stash.. quality, quantity and price uncertain, but I have some more I'll be bagging up over the weekend.
I would not be surprised if the gains didn't survive the day.
That would indeed be good news. It would move the possibility of a populist revolt forward a wee bit.
Comrade Dark & Stormy Night, in the new United Soviet Socialist States of America, there are no gender differences and all loyal workers of the state shall be screwed equally, excepting our Nomenklatura comrades of course.
.
Taxpayer Anal Recurring Penetrator?
.
"If the Treasury can accurately value the assets in question, and purchase them at a discount to that value, and later sell at above that discount,"
SRC - Just how is a BBB tranche of a CDO which is selling for 30 cents on the dollar now, going to be valued at more than $0.30 later? Do you understand how the various tranches are paid and valued. These are derivatives. There is no collateral.
Mortgage Investment Liquidation Fund
M.I.L.F.
Too many comments for me to check, but this thing will end up going over $1T.
It's Friday
Don't panic. It's impossible to see what's happening from here under the bus.
Steady As She Sinks.
Did Paulson unzip his pants and show America his Bazooka? Did he wear glod chains and a beret, is he still worth $800 million??
Bazooka my arse...This was an Atomic Bomb that just took out all retirement plans or hopes of a brighter future for us and the majority of the unborn.
I hear hurricanes a-blowing,
I know the end is coming soon.
I fear rivers over flowing.
I hear the voice of rage and ruin.
"simply noting similarities to the original RTC concept, which I believe did yield a paper profit to the government."
Honest mistake, as this is what most folks think. Most think this RTC II will be purchasing loans, as did the first RTC. It will not. The new RTC II will be purchasing OTC derivatives, which is not the same, can not be valued the same, and will does not have collateral. Paulson is pulling a fast one on us.
(OT) Yes, this is slightly OT, but it was just so shocking to me that I had to share.
I have a modest-sized HELOC, interest-only payments, with a low balance, left over from when I did a piggy-back refi a few years ago.
This morning I got a call from my bank about it. Naturally, with events as they are, what I expected was that they were calling to say the the full amount was due immediately, that the credit line was being reduced, etc.
Is everybody sitting down?
The bank was calling me to let me know I could raise the line dramatically, borrow against it, and if I did it before the end of the month they'd offer me an interest rate of...wait for it...wait...Prime minus 75 bp. FOR THE LIFE OF THE LOAN!!!
So I guess they are giving out free ponies.
Sebastia
Delong speaks.
Understanding the Three Ways of Dealing with Financial Crises - J. Bradford DeLong's Grasping Reality with All Eight Tentacles
I choose to believe in his optimism and to hide under the bed.
I agree completely Dryfly. That is the real insanity here. They are just screwing with people before the inevitable happens. The whole time. Let's let Lehman fail and other forced corporate restructurings before we move on a bailout for the whole damn system. Let's engineer the mother of all short squeezes before reality sets in and everyone realizes the Treasury can't change the fundamentals. It is hard to wrap my head around the black hole that is this administration's legacy. Treasury is now upping the amout of FnF paper they are buying.
"Paulson is pulling a fast one on us."
YA THINK?
Sebastian
Go fu-k youself.
Have you all called your congresspersons yet?
Put down the cheetos, and pick up a fucking phone.
This bailout requires CONGRESSIONAL APPROVAL.
Contact Elected Officials: USA.gov
The Govt(surrogates of the elite class), will do anything and everything to survive in power, even if it impoverishes the middle class by loading up debt.
That's the way it was and is...
There is a club for the rich and you are not part of it, to paraphrase G.Carlin.
If you ignore the fiction of the 79.9% holding in AIG and count that as 'on the books' doesn't the minimum realistic estimate of the new RTC added on top of our other recent national purchases, bring our national debt well over $11 trillion.... the doubling of our national debt from $5.5 trillion in 2000. A true accomplishment! ...Am I being reasonable in this estimate?...
The Fed's daily report gave 30 day A2 vs AA CP at 602 vs 241 last night. And, for 60 or 90, it was, well:
"Trade data insufficient to support calculation of the 60-day A2/P2 nonfinancial and 90-day A2/P2 nonfinancial rates for September 18, 2008."
With the probability of further MM runs way down, and a facility in place to mediate around the CP market freeze, these numbers should be way better today.
@Fair Economist: If you're around, this was right out of the PennCentral playbook, with the added touch of springing the liquidity trap, even if only temporarily, with just the promise of credit inflation via the "Treasury/Politicians Fix Everything" deal.
Pretty impressive broken field running, all in all.
Nothing more to watch at this accident scene. Next will be to see how the options market and the short ETF's and rate of return swaps wire around the short restrictions, if in fact not even those market makers can short.
826 Pissed Off Visitors Online
Senators of the 110th Congress
U.S. Senate: Senators Home
They are all crooks, but why not call them today and keep calling!!!
TARP will be run by
The
Protect
Wall St.
Not
America
Government
Entity
Also known as PWNAGE
Finance
EXCERPT FROM RULE XXV OF THE STANDING RULES OF THE SENATE
1. The following standing committees shall be appointed at the commencement of each Congress, and shall continue and have the power to act until their successors are appointed, with leave to report by bill or otherwise on matters within their respective jurisdictions:
(i) Committee on Finance, to which committee shall be referred all proposed legislation, messages, petitions, memorials, and other matters relating to the following subjects:
Taxpayer Anal Recurring Penetrator?
Just wait until the Admiral Ackbar meme collides with this baby....
It's a TARP !
we're all comrades now
House Financial Services Committee
Oversight and Investigations
Chairman Melvin L. Watt (NC) leads the subcommittee, which conducts oversight of the agencies, departments, and programs under the Committees jurisdiction. The subcommittee also conducts investigations on any matter within the jurisdiction of the Committee, and evaluates the need for any legislative changes to the laws and programs within this jurisdiction.
Here seems to be a Mark Foley/ FEMA-like Brown retard! I wonder if SIFMA has this under control here???
So I guess they are giving out free ponies.
Sebastian
Sebastian | 09.19.08 - 11:22 am | #
That's great.
Now go get your FUCKING shinebox.
listen, I am not happy with the current circumstances, however, since we are not part of the elite, we will just have to eat it!!
The only issue remaining is how do we reduce the damage to our selves.
No answer!!!
What I am doing is cash in the mattress and short term t-bills. I would rather to bleed slowly from inflation than the lost of my entire investment in the stock market!!!
jmpo
It will funded by the Bureau to Underwrite Lousy Loans, Stocks, and Homes in the Interest of Taxpayers.
"the system is rigged". If that doesn't work, change the rules to "rigged the system".
Am I wrong?
Video of crooks:
YouTube - Rep. Melvin L. Watt - HR 5767 Hearing (06/25/08)
Everyone loading up on SKF and other inverse funds...
Ask yourself how these funds work. Most (if not all) do not simply short the underlying stocks, but instead hold an equity swap.
If you are buying one of these, do you know who your counter-party is, and what their ability to pay off will be in the event that the gains you are hoping for from the crash of that particular underlying index comes to fruition?
I have a feeling comrades Bush, Paulson, Cox and Bernanke will be in no rush to bail out the portion of the derivatives market that enables the ultra-short funds to exist.
I'm all for buying protection at reasonable prices (and all PUTs I've looked at today seem to fail that test for obvious reasons), but insurance is only as good as the underwriter.
"No one gets out alive".
Two choices:
"Straight on hit with the train"
"Glancing blow"
jopo (just one person's opinion)
Talk with the man:
Discuss Melvin L. Watt: Representative from District 5 North Carolina (Democrat)
OK...Last one.
The WTO issued it's first ever "Recommendations for American Workers by the Association of Non-American Lenders." The document, also known as RAW ANAL, suggests a lower standard of living, higher taxes, and fewer government services. Sources close to Washington have indicated that the suggestions would be implemented immediately.
Distribution has already started, and American workers can expect to receive RAW ANAL over the next few weeks and months.
Calling this RTC II is an act of propaganda.
They know it is nothing like the original, but they also need to sell it to J6P.
Look, some people on this board think RTC returned a profit to govt!!!! Are you kidding me? Who wouldn't want to attach the current idea to a past meme like this.
These guys are smart. Horrible, but smart.
Raise your hand if you believe we can still afford $1 trillion for our military annually.
No one? That's what I figured. Now raise your hand if you expect any politician to say this in public.
No one? Yeah, that's what I figured.
If short sales as result of new options positions are not permitted, what value do my new put options have if i bought them today for "open" in a cash account?
Lets cut to the quick...
Put $ 1 trillion dollars bounty on "OSB" and get this over with. We need to get the hell out of the middle east.
This amount of money could buy out of one of these countries.
It's interesting as the plainness of the nomenclature shows just how far the credit crisis has changed everything.
This started with the great sounding "Bear Stearns High Grade Structured Credit Strategies Enhanced Leveraged Fund " hedge fund which collapsed, a great sounding name which obscured the problems underlying the assets.
Now we are at the plan & simple "TARP" which stands for the simple and obvious "Troubled Asset Relief Program".
Rather a nice metaphor for the financial markets themselves - giving up deliberately obscured AAAness in favor of transparency...
Not only is this "Talk Like a Pirate Day". its "Act Like a Pirate Day"!
@probert:
If short sales as result of new options positions are not permitted, what value do my new put options have if i bought them today for "open" in a cash account?
Your puts are fine. Your counterparty is the Options Clearing Corp. The writer of your put would normally short some percentage of the size you bot, but he can write "naked," which just means he's taking the downside risk on his book with daily mark to market.
What it will mean, if all put writing has to be naked writing (and I still can't believe that will be the case) is that the price of puts (and call, then, too, by the way) will have to go up.
All right, unemployment in the Great Depression only got up to 25%. (I knew it was one of those round numbers -- but was remembering the stories of men coming to grandma's back door in the late evening to see if there were any scraps from her table they could take home, and I got carried away. And I am not a real estate agent, though as to whether I'm Hank Paulson ... )
What's happening currently should be very closely watched by everyone...regardless of if you are interested or not interested in the market. Why?
Because for probably the first time, we are seeing a nice but even now small glimpse into the fraud, the sham, and the crookery of what is called the US stock market and US economy.
These fkers are like a bunch of mafia people in a house where someone accidentally tripped while carrying a bundle of money, the money hit the front door and accidentally opened it at the same time you are walking your dog and passing that house.
You look inside momentarily to see piles of money, drugs, and whatever else before they close the door on you.
Wall Street is a complete scam. It's no wonder 70% of the worlds population lives in poverty...so some fk can make a few bucks from his computer everyday.
The bailout and injection of money is a clear indicator that no matter what these companies do, they will be backed and helped up again. And again, and again.
Very clever. Describe the problem as "illiquid assets" that are "clogging" our otherwise fine financial system. That was the solution presents itself: remove the "clog".
For those who are having trouble getting their minds around the issue, imagine that GM, Ford and Chrysler came to Washington and said that their "illiquid assets" (SUV's and Hummers) were "clogging" our otherwise fine automobile industry. Would everybody be agreeing that the solution was for the taxpayer to buy those assets so that the auto companies could return to their otherwise fine business of producing cars, jobs and profits for the American people? Of course not. Most people would say "let them fail". Most people would recognize that there is plenty of capital, equipment and talent that would form new companies, or move to better managed existing companies, and that soon we would be seeing the fruits of that "creative destruction" without spending a penny of taxpayer money. Can somebody explain why banks should be any different? There are trillions of dollars in cash on the sidelines looking for a safe investment. If American investment banks fail, others will rush in. No, these political hacks are not bailing out "the system", they are bailing out their buddies, their sponsors and the establishment.
Listen to the soothing words about the risks to "our" financial system. Sorry, but I don't remember being invited to sit in on any bank board meetings while the decisions were made to acquire these "illiquid" assets. And I certainly haven't seen any clogs in my financial system. Perhaps that's because I paid attention, kept my money out of risky banks and stuck to my knitting. Yet now the problems of the profligate and connected are "our" problems. How convenient.
"""We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses.""
The root stress is FRAUD fking Paulson...
It's unbelievable...the justice system in this country is no different whatsoever from any corrupt system in another country.
the TARP TRAP
Selling all long equity & fixed income positions. I give the market a floor for a couple of weeks at most.
All this from the Interactive Broker's website (I think you don't have to be a client to see it,under the Trading/Shortable Stocks tab on the menu).
This is exactly what I wrote about in post last night: enforce t+3, which allows legitimate purpose short sales, but makes the deliberate short attacks, with the complicity of the prime brokers who would let the fail slide a week or more, much, much harder.
This, in fact, is not so bad.
"The rules, which have been released on an interim basis until at least October 1, 2008, require market participants to meet their delivery obligations for stock and other deliverable securities on the scheduled settlement date (generally three business days after the sale transaction date, or "T+3"). Firms who fail to comply with the new rules will be subject to fines and/or sanctions.
The new rules create a defense against short sellers who, either by intent or otherwise, fail to deliver the stock that they transacted. There are several provisions in the rules describing actions that may or must be taken by the broker/dealer/clearer when they are unable to meet their delivery obligations. Clients interested in understanding the rules as announced by the SEC can find them at: Press Release: SEC Issues New Rules to Protect Investors Against Naked Short Selling Abuses; 2008-204; Sept. 17, 2008
Due to the short notification of the new rules, Interactive Brokers will deploy our implementation in phases, the first phase being an automated buy-in when we are unable to meet delivery obligations. If we are unable to make delivery on stock sold short by our clients for any reason, we will repurchase the sold shares as soon as we determine that we are unable to make actual delivery on settlement day or as soon as is practical thereafter. These "buy-ins" will be applied to the client accounts who initiated the short transactions and are unable to make timely delivery. Regrettably, the timeline required by the rules will provide little opportunity for advance communications to clients."
The lobbyists and donationists will ensure that corporate interests are properly represented.
Peons like us are likely to get ...
peed on.
Profits are privatized ..losses are socialized
Americans ..we need to STOP this insane plan which is nothing but a bailout of the share prices of the already
wealthy. I encourage everyone to fax their representatives objecting to this departure from a free market economy to a systematic reward system for the corrupt. Remember N. Bush with the Silverado S&L debacle
and J. McCain and the Keating Five. BAILOUTS DO NOT WORK!
We are back in the same predicament. STOP THIS INSANITY before our children are in hock for perpetuity.